Employee Matters Agreement - Adaptec Inc. and Roxio Inc.
EMPLOYEE MATTERS AGREEMENT
BETWEEN
ADAPTEC, INC.
AND
ROXIO, INC.
EFFECTIVE AS OF
NOVEMBER __, 2000
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS........................................................................1
1.1 Adaptec....................................................................1
1.2 Adaptec Business...........................................................1
1.3 Adaptec Group..............................................................1
1.4 Adaptec Employee...........................................................1
1.5 Adaptec Stock Value........................................................2
1.6 Affiliate..................................................................2
1.7 Agreement..................................................................2
1.8 Ancillary Agreements.......................................................2
1.9 California State Disability Insurance......................................2
1.10 COBRA......................................................................2
1.11 Code.......................................................................2
1.12 Distribution...............................................................2
1.13 Distribution Date..........................................................2
1.14 Employee Agreement.........................................................2
1.15 ERISA......................................................................2
1.16 FMLA.......................................................................2
1.17 Health and Welfare Plans...................................................2
1.18 Health Plans...............................................................3
1.19 IPO........................................................................3
1.20 Leave of Absence Plans.....................................................3
1.21 Liabilities................................................................3
1.22 Nasdaq.....................................................................3
1.23 Option.....................................................................3
1.24 Participating Company......................................................3
1.25 Person.....................................................................3
1.26 Plan.......................................................................4
1.27 Ratio......................................................................4
1.28 Registration Date..........................................................4
1.29 Roxio......................................................................4
1.30 Roxio Business.............................................................4
1.31 Roxio Group................................................................4
1.32 Roxio Employee.............................................................4
1.33 Roxio Stock Value..........................................................4
1.34 Separation.................................................................4
1.35 Separation Agreement.......................................................4
1.36 Separation Date............................................................4
1.37 Stock Plan.................................................................4
1.38 Stock Purchase Plan........................................................5
1.39 Subsidiary.................................................................5
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TABLE OF CONTENTS
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1.40 Supplemental Short-Term Disability Plan....................................5
1.41 Voluntary Short-Term Disability Plan.......................................5
1.42 401(k) Plan................................................................5
ARTICLE II GENERAL PRINCIPLES................................................................5
2.1 Liabilities................................................................5
2.2 Establishment of Roxio Plans...............................................5
2.3 Roxio Under No Obligation to Maintain Plans................................6
2.4 Roxio's Participation in Adaptec Plans.....................................6
2.5 Terms of Participation by Roxio Employees in Roxio Plans...................7
2.6 Foreign Plans..............................................................7
ARTICLE III DEFINED CONTRIBUTION PLAN........................................................7
3.1 401(k) Plan................................................................7
ARTICLE IV NON-QUALIFIED PLAN................................................................8
4.1 Deferred Compensation Plan.................................................8
ARTICLE V HEALTH AND WELFARE PLANS...........................................................8
5.1 Health Plans as of the Distribution Date...................................8
5.2 Health Plans from the Separation Date through the Distribution Date........9
5.3 Group Life Plan............................................................9
5.4 Accidental Death & Dismemberment Plan......................................9
5.5 Disability Plans...........................................................9
5.6 Business Travel Accident Insurance.........................................9
5.7 Section 125 Plans.........................................................10
5.8 COBRA.....................................................................10
5.9 Workers' Compensation Plan................................................10
5.10 Leave of Absence Plans....................................................10
ARTICLE VI EQUITY AND OTHER COMPENSATION....................................................11
6.1 Bonus and Retention Plans.................................................11
6.2 Adaptec Options...........................................................11
6.3 Stock Purchase Plan.......................................................12
6.4 Stock Plan................................................................12
ARTICLE VII ADMINISTRATIVE PROVISIONS.......................................................12
7.1 Sharing of Participant Information........................................12
7.2 Costs and Expenses........................................................12
ARTICLE VIII EMPLOYMENT-RELATED MATTERS.....................................................12
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8.1 Employee Agreements.......................................................12
8.2 Terms of Roxio Employment.................................................14
8.3 Non-Solicitation of Employees.............................................14
8.4 Employment of Employees with United States Work Visas.....................14
8.5 Non-Termination of Employment; No Third-Party Beneficiaries...............14
8.6 Employment Litigation.....................................................14
ARTICLE IX GENERAL PROVISIONS...............................................................15
9.1 Effect if Separation, IPO and/or Distribution Does Not Occur..............15
9.2 Relationship of Parties...................................................15
9.3 Governing Law.............................................................15
9.4 Assignment................................................................15
9.5 Severability..............................................................15
9.6 Interpretation............................................................16
9.7 Amendment.................................................................16
9.8 Termination...............................................................16
9.9 Conflict..................................................................16
9.10 Counterparts..............................................................16
9.11 Dispute Resolution........................................................16
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EMPLOYEE MATTERS AGREEMENT
This EMPLOYEE MATTERS AGREEMENT (the "Agreement") is entered into on
November __, 2000, between Adaptec, Inc., a Delaware corporation, and Roxio,
Inc., a Delaware corporation. Capitalized terms used herein (other than the
formal names of Adaptec Plans (as defined below) and related trusts of Adaptec)
and not otherwise defined, shall have the respective meanings assigned to them
in Article I or as they may be defined elsewhere in this Agreement.
WHEREAS, the Board of Directors of Adaptec has determined that it is in
the best interests of Adaptec and its shareholders to separate Adaptec's
existing businesses into two (2) independent businesses, Adaptec and Roxio; and
WHEREAS, in furtherance of the foregoing, Adaptec and Roxio have agreed
to enter into this Agreement to allocate between them Assets, Liabilities and
responsibilities with respect to certain employee compensation, benefit plans,
programs and arrangements, and certain employment matters;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Wherever used in this Agreement, the following terms shall have the
meanings indicated below or as such term may be defined elsewhere in this
Agreement, unless a different meaning is plainly required by the context. The
singular shall include the plural, unless the context indicates otherwise.
Headings of sections are used for convenience of reference only, and in case of
conflict, the text of this Agreement, rather than such headings, shall control:
1.1 ADAPTEC. "Adaptec" means the Adaptec Business and the Adaptec
Group.
1.2 ADAPTEC BUSINESS. "Adaptec" has the meaning set forth in
Section 7.1 of the Separation Agreement.
1.3 ADAPTEC GROUP. "Adaptec Group has the meaning set forth in
Section 7.2 of the Separation Agreement.
1.4 ADAPTEC EMPLOYEE. "Adaptec Employee" means an individual who
is: (a) on the Separation Date actively employed by, or on leave of absence
from, Adaptec (b) an employee or group of employees designated as Adaptec
Employees by Adaptec and Roxio, by mutual agreement; or (c) an employee of
Adaptec or Roxio who, prior to the Distribution Date, is on, or begins, a
disability leave of absence until the earlier of (i) the employee's termination
of employment, (ii) the passage of six months as measured from the employee's
last day of active work, or (iii) the employee is medically released to return
to work.
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1.5 ADAPTEC STOCK VALUE. "Adaptec Stock Value" means the closing
per-share price of Adaptec common stock as listed on the Nasdaq on the last
trading day before the Distribution.
1.6 AFFILIATE. "Affiliate" means, with respect to any specified
Person, any entity that Controls, is Controlled by, or is under common Control
with such Person. For this purpose, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such entity, whether through ownership of voting securities or other
interests, by control, or otherwise.
1.7 AGREEMENT. "Agreement" means this Employee Matters Agreement,
including all the Schedules hereto, if any, and all amendments made hereto from
time to time.
1.8 ANCILLARY AGREEMENTS. "Ancillary Agreements" has the meaning
set forth in Section 2.1 of the Separation Agreement.
1.9 CALIFORNIA STATE DISABILITY INSURANCE. "California State
Disability Insurance" means the disability insurance made available and
administered by the State of California to employers and employees.
1.10 COBRA. "COBRA" means the continuation coverage requirements
for "group health plans" under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended from time to time, and as codified in
Code Section 4980B and ERISA Sections 601 through 608.
1.11 CODE. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.12 DISTRIBUTION. "Distribution" has the meaning set forth in the
Recitals of the Separation Agreement.
1.13 DISTRIBUTION DATE. "Distribution Date" has the meaning set
forth in Section 4.1 of the Separation Agreement.
1.14 EMPLOYEE AGREEMENT. "Employee Agreement" has the meaning set
forth in Section 8.1 hereof.
1.15 ERISA. "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.16 FMLA. "FMLA" means the Family and Medical Leave Act of 1993,
as amended from time to time.
1.17 HEALTH AND WELFARE PLANS. "Health and Welfare Plans," when
immediately preceded by "Adaptec," means the Adaptec Health Plans, the Adaptec
Code Section 125/Flexible Spending Plan (the "Adaptec 125 Plan"), established
and maintained by Adaptec for the benefit of eligible employees of Adaptec, and
such other welfare plans or programs as may apply to such
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employees through the Distribution Date. When immediately preceded by "Roxio,"
Health and Welfare Plans means the Roxio Health Plans, the Roxio Code Section
125/Flexible Spending Plan (if applicable) (the "Roxio 125 Plan"), established
and maintained by Roxio for the benefit of eligible employees of Roxio, and such
other welfare plans or programs that Roxio may establish.
1.18 HEALTH PLANS. "Health Plans," when immediately preceded by
"Adaptec," means the medical, HMO, vision, and dental plans and any similar or
successor Plans. When immediately preceded by "Roxio," "Health Plans" means the
medical, HMO, vision and dental plans that may be established by Roxio.
1.19 IPO. "IPO" has the meaning set forth in the Recitals of the
Separation Agreement.
1.20 LEAVE OF ABSENCE PLANS. "Leave of Absence Plans," when
immediately preceded by "Adaptec," means the personal, medical/disability,
military, FMLA and other leave of absence programs that are offered, or may in
the future be offered, from time to time under the personnel policies and
practices of Adaptec. When immediately preceded by "Roxio," "Leave of Absence
Plans" means the leave of absence programs that may be established by Roxio.
1.21 LIABILITIES. "Liabilities" means all debts, liabilities,
guarantees, assurances, commitments, and obligations, whether fixed, contingent
or absolute, asserted or unasserted, matured or unmatured, liquidated or
unliquidated, accrued or not accrued, known or unknown, due or to become due,
whenever or however arising (including, without limitation, whether arising out
of any Contract or tort based on negligence or strict liability) and whether or
not the same would be required by generally accepted accounting principles to be
reflected in financial statements or disclosed in the notes thereto. For this
purpose, "Contract" means any contract, agreement, lease, license, sales order,
purchase order, instrument or other commitment that is binding on any Person or
any part of its property under applicable law.
1.22 NASDAQ. "Nasdaq" means the Nasdaq National Market.
1.23 OPTION. "Option," when immediately preceded by "Adaptec,"
means an option to purchase Adaptec common stock pursuant to an Adaptec Stock
Plan. When immediately preceded by "Roxio," "Option" means an option to purchase
Roxio common stock pursuant to a Roxio Stock Plan.
1.24 PARTICIPATING COMPANY. "Participating Company" means: (a)
Adaptec; (b) any Person (other than an individual) that Adaptec has approved for
participation in, has accepted participation in, and which is participating in,
a Plan sponsored by Adaptec; and (c) any Person (other than an individual)
which, by the terms of such Plan, participates in such Plan or any employees of
which, by the terms of such Plan, participate in or are covered by such Plan.
1.25 PERSON. "Person" has the meaning as set forth in Section 7.24
of the Separation Agreement.
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1.26 PLAN. "Plan" means any plan, policy, program, payroll
practice, arrangement, contract, trust, insurance policy, or any agreement or
funding vehicle providing compensation or benefits to employees, former
employees, directors or consultants of Adaptec or Roxio.
1.27 RATIO. "Ratio" means the ratio determined by dividing the
Roxio Stock Value by the Adaptec Stock Value.
1.28 REGISTRATION DATE. "Registration Date" means the date on which
the IPO Registration Statement (as defined in the Separation Agreement) is
declared effective by the Securities and Exchange Commission.
1.29 ROXIO. "Roxio" means the Roxio Business and the Roxio Group.
1.30 ROXIO BUSINESS. "Roxio" Business" has the meaning as set forth
in Section 7.29 of the Separation Agreement.
1.31 ROXIO GROUP. "Roxio" Group" has the meaning as set forth in
Section 7.30 of the Separation Agreement.
1.32 ROXIO EMPLOYEE. "Roxio Employee" means any individual who: (a)
is actively employed by Roxio on the Separation Date; (b) moves to the employ of
Roxio from the employ of Adaptec; (c) an employee or group of employees
designated as Roxio Employees by Adaptec and Roxio, by mutual agreement, or (d)
an individual hired by Roxio on or after the Separation Date.
1.33 ROXIO STOCK VALUE. "Roxio Stock Value" means the opening
per-share price of Roxio common stock as listed on Nasdaq, as applicable, on the
first trading day after the Distribution.
1.34 SEPARATION. "Separation" has the meaning set forth in the
Recitals of the Separation Agreement.
1.35 SEPARATION AGREEMENT. "Separation Agreement" means the Master
Separation and Distribution Agreement, dated as of September __, 2000, of which
this is Exhibit E thereto.
1.36 SEPARATION DATE. "Separation Date" has the meaning set forth
in Section 1.1 of the Separation Agreement.
1.37 STOCK PLAN. "Stock Plan," when immediately preceded by
"Adaptec," means any plan, program, or arrangement, other than the Stock
Purchase Plan, pursuant to which employees, directors and consultants hold
Options, Adaptec Restricted Stock, or other Adaptec equity incentives. "Stock
Plan," when immediately preceded by "Roxio," means any plan, program, or
arrangement, other than the Stock Purchase Plan, pursuant to which employees,
directors and consultants hold Options, Roxio Restricted Stock, or other Roxio
equity incentives.
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1.38 STOCK PURCHASE PLAN. "Stock Purchase Plan," when immediately
preceded by "Adaptec," means the Adaptec Employee Stock Purchase Plan. When
immediately preceded by "Roxio," "Stock Purchase Plan" means the employee stock
purchase plan to be established by Roxio.
1.39 SUBSIDIARY. "Subsidiary" has the meaning set forth in Section
7.33 of the Separation Agreement.
1.40 SUPPLEMENTAL SHORT-TERM DISABILITY PLAN. Supplemental Short
Term Disability Plan means the disability plan offered by Adaptec that is
offered to eligible individuals that is not in lieu of, but is addition to, the
benefits provided under the Adaptec Voluntary Short Term Disability Plan.
1.41 VOLUNTARY SHORT-TERM DISABILITY PLAN. The Voluntary Short-Term
Disability Plan means the disability plan offered by Adaptec that is offered to
eligible individuals that covers Adaptec Employees who are employed in
California and that is offered in lieu of California State Disability Insurance.
1.42 401(K) PLAN. "401(k) Plan," when immediately preceded by
Adaptec means the qualified retirement plan of Adaptec. When immediately
preceded by Roxio, "401(k) Plan" shall mean the qualified retirement plan that
Roxio shall establish, sponsor, and maintain effective as of the Distribution
Date or such other date as Adaptec and Roxio may mutually agree.
ARTICLE II
GENERAL PRINCIPLES
2.1 LIABILITIES. Except as specified otherwise in this Agreement
or as mutually agreed upon by Roxio and Adaptec from time to time, effective as
of the Separation Date, Roxio shall pay to Adaptec an amount that equals
twenty-five percent (25%) of Roxio's adjusted payroll charges during the time
from the Separation Date up to the Distribution Date. Except as specified
otherwise in this Agreement or as mutually agreed upon by Roxio and Adaptec, any
Liability incurred with respect to Adaptec Plans by Roxio as a Participating
Company up to the Distribution Date shall be borne solely by Adaptec, and any
Liability incurred with respect to Roxio Plans, as then, or in the future, may
be established, from the Distribution Date forward will be borne solely by
Roxio.
2.2 ESTABLISHMENT OF ROXIO PLANS.
(a) HEALTH AND WELFARE PLANS. Except as specified
otherwise in this Agreement, effective as of the Distribution Date (or such
other date(s) as Adaptec and Roxio may mutually agree), Roxio shall adopt the
Roxio Health and Welfare Plans.
(b) 401(K) PLAN. Effective as of the Distribution Date
(or such other date as Adaptec and Roxio may mutually agree), Roxio shall
establish, or cause to be established, a separate trust, which is intended to be
tax-qualified under Code Section 401(a), to be exempt from taxation under Code
Section 501(a)(1), and to form the Roxio 401(k) Plan.
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(c) EQUITY AND OTHER COMPENSATION. Except as specified
otherwise in this Agreement, effective on or before the IPO (or such other
date(s) as Adaptec and Roxio may mutually agree), Roxio shall adopt the Roxio
Stock Plans. Effective on or before the Registration Date (or such other date as
Adaptec and Roxio may mutually agree), Roxio shall adopt the Roxio Stock
Purchase Plan.
(d) OTHER PLANS. Except as otherwise specified in this
Agreement, effective as of the Distribution Date Roxio shall adopt certain Roxio
Plans that are specifically tied to its payroll practices, including, without
limitation, such Plans that Roxio deems appropriate.
2.3 ROXIO UNDER NO OBLIGATION TO MAINTAIN PLANS. Except as
specified otherwise in this Agreement, nothing in this Agreement shall preclude
Roxio, at any time after the Distribution Date, from amending, merging,
modifying, terminating, eliminating, reducing, or otherwise altering in any
respect any Roxio Plan, any benefit under any Roxio Plan or any trust, insurance
policy or funding vehicle related to any Roxio Plans, or any employment or other
service arrangement with Roxio Employees, consultants or vendors (to the extent
permitted by law).
2.4 ROXIO'S PARTICIPATION IN ADAPTEC PLANS.
(a) PARTICIPATION IN ADAPTEC PLANS. Except as specified
otherwise in this Agreement or as Adaptec and Roxio may mutually agree, Roxio
shall, until the Distribution Date, continue to be a Participating Company in
the Adaptec Plans.
(b) ADAPTEC'S GENERAL OBLIGATIONS AS PLAN SPONSOR. To the
extent that Roxio is a Participating Company in any Adaptec Plan, Adaptec shall
continue to administer, or cause to be administered, in accordance with its
terms and applicable law, such Adaptec Plan, and shall have the sole and
absolute discretion and authority to interpret the Adaptec Plan, as set forth
therein.
(c) ROXIO'S GENERAL OBLIGATIONS AS PARTICIPATING COMPANY.
Roxio shall perform, with respect to its participation in the Adaptec Plans, the
duties of a Participating Company as set forth in each such Plan or any
procedures adopted pursuant thereto, including (without limitation): (i)
assistance in the administration of claims, to the extent requested by the
claims administrator of the applicable Adaptec Plan; (ii) full cooperation with
Adaptec Plan auditors, benefit personnel and benefit vendors; (iii) preservation
of the confidentiality of all financial arrangements Adaptec has or may have
with any vendors, claims administrators, trustees, service providers or any
other entity or individual with whom Adaptec has entered into an agreement
relating to the Adaptec Plans; and (iv) preservation of the confidentiality of
participant information (including, without limitation, health information in
relation to leaves) to the extent not specified otherwise in this Agreement.
(d) TERMINATION OF PARTICIPATING COMPANY STATUS. Except
as specified otherwise in this Agreement or as mutually agreed upon by Roxio and
Adaptec, effective as of
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the Distribution Date, Roxio shall automatically cease to be a Participating
Company in Adaptec Plans.
2.5 TERMS OF PARTICIPATION BY ROXIO EMPLOYEES IN ROXIO PLANS
(a) NON-DUPLICATION OF BENEFITS. Except as specified
otherwise in this Agreement or as mutually agreed upon by Roxio and Adaptec,
effective as of the Distribution Date, Adaptec and Roxio shall agree on methods
and procedures, including amending the respective Plan documents, to prevent
Roxio Employees from receiving duplicate benefits from the Adaptec Plans and the
Roxio Plans, except as may be set forth in Section 6.3 and Section 6.4 of this
Agreement.
(b) SERVICE CREDIT. Except as specified otherwise in this
Agreement, with respect to Roxio Employees, Roxio shall make reasonable efforts
to provide that all service, all compensation and all other benefit-affecting
determinations that, as of the Distribution Date, were recognized under the
corresponding Adaptec Plan shall, as of the Distribution Date, receive full
recognition and credit and be taken into account under such Roxio Plan to the
same extent as if such items occurred under such Roxio Plan, except to the
extent that duplication of benefits would result.
2.6 FOREIGN PLANS. Roxio and Adaptec each intend that the matters,
issues or Liabilities relating to, arising out of, or resulting from foreign
plans and non-U.S.-related employment matters be handled in a manner that is in
compliance with the requirements of applicable local law.
ARTICLE III
DEFINED CONTRIBUTION PLAN
3.1 401(K) PLAN.
(a) 401(K) PLAN TRUST. Effective as of the Distribution
Date (or such other date as Adaptec and Roxio may mutually agree), Roxio shall
establish, or cause to be established, a separate trust, which is intended to be
tax-qualified under Code Section 401(a), to be exempt from taxation under Code
Section 501(a)(1), and to form the Roxio 401(k) Plan.
(b) 401(K) PLAN: ASSUMPTION OF LIABILITIES AND TRANSFER
OF ASSETS. Effective as of the Distribution Date (or such other date as Adaptec
and Roxio may mutually agree): (i) the Roxio 401(k) Plan shall assume and be
solely responsible for all Liabilities relating to, arising out of, or resulting
from Roxio Employees under the Adaptec 401(k) Plan; and (ii) Adaptec shall cause
the accounts of the Roxio Employees under the Adaptec 401(k) Plan that are held
by its related trust to be transferred to the Roxio 401(k) Plan and its related
trust, and Roxio shall cause such transferred accounts to be accepted by such
Plan and its related trust. Roxio and Adaptec each agree to use their reasonable
best efforts to accomplish this 401(k) Plan and related trust spin-off.
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(c) NO DISTRIBUTION TO ROXIO EMPLOYEES. The Adaptec
401(k) Plan and the Roxio 401(k) Plan shall provide that no distribution of
account balances shall be made to any Roxio Employee on account of Roxio ceasing
to be an Affiliate of Adaptec as of the Distribution Date.
ARTICLE IV
NON-QUALIFIED PLAN
4.1 DEFERRED COMPENSATION PLAN.
Roxio shall, until the Distribution Date (or such other date
as Adaptec and Roxio may mutually agree), continue to be a Participating Company
in the Adaptec deferred compensation plan (the "Deferred Compensation Plan").
Before the Separation Date, Adaptec shall amend the Deferred Compensation Plan
to provide that participants under the Deferred Compensation Plan who become
Roxio Employees will not be deemed to have a termination of employment until
such time as the participant's employment with Roxio is terminated. Roxio shall
promptly notify Adaptec upon the termination of employment (or the occurrence of
another distributable event) of a Roxio Employee who is a participant in the
Deferred Compensation Plan.
ARTICLE V
HEALTH AND WELFARE PLANS
5.1 HEALTH PLANS AS OF THE DISTRIBUTION DATE.
(a) ROXIO HEALTH PLANS. As of the Distribution Date (or
such other date(s) as Adaptec and Roxio may mutually agree), Roxio shall have
established Roxio Health Plans that will provide coverage for Roxio Employees
(and their eligible dependents). Effective as of the Distribution Date, Roxio
shall cease to be a Participating Company in the Adaptec Health Plans, and Roxio
shall be solely responsible for (i) all Liabilities incurred with respect to
such Roxio Health Plans; and (ii) the administration of the Roxio Health Plans,
including, without limitation, the payment of all employer-related costs in
establishing and maintaining the Roxio Health Plans, and for the collection and
remittance of employee premiums.
(b) PENDING TREATMENTS. Notwithstanding Subsection 5.1(a)
above, all courses of treatment that have begun prior to the Distribution date
with respect to Roxio Employees (or their eligible dependents) under the
applicable Adaptec Health Plan shall be provided without interruption under the
applicable Adaptec Health Plan until the earlier of: (i) such course of
treatment is concluded or discontinued or (ii) ninety (90) days from the date
medical attention was last received with respect to such course of treatment
("Uninterrupted Treatment"). For purposes of this Section 5.1(b) only, courses
of treatment means that a Roxio Employee, prior to the Distribution Date, has
received, and at the Distribution Date is still
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receiving, medical treatment for a specific illness or injury and such
Uninterrupted Treatment is applicable only to that specific illness or injury.
(c) VENDOR ARRANGEMENTS. If requested by Roxio, Adaptec
shall use reasonable efforts in assisting Roxio to procure, effective as of the
Distribution Date (or such other date(s) as Adaptec and Roxio may mutually
agree), Roxio Health Plans.
(d) NO STATUS CHANGE. The transfer or other movement of
employment between Adaptec to Roxio at any time upon or before the Distribution
Date shall neither constitute nor be treated as a "status change" or termination
of employment under the Adaptec Health Plans or the Roxio Health Plans.
5.2 HEALTH PLANS FROM THE SEPARATION DATE THROUGH THE DISTRIBUTION
DATE. Except as otherwise agreed by Adaptec and Roxio, for the period beginning
with the Separation Date and ending on the Distribution Date (or such other
period as Adaptec and Roxio may mutually agree), Roxio shall be a Participating
Company in the Adaptec Health Plans. Adaptec shall administer and be responsible
for claims incurred under the Adaptec Health Plans by Roxio Employees before the
Distribution Date, subject to the limitations as set forth in Section 5.1(b).
Any determination made or settlements entered into by Adaptec with respect to
such claims shall be final and binding. Adaptec shall retain financial and
administrative ("run-out") Liability and all related obligations and
responsibilities for all claims incurred by Roxio Employees before the
Distribution Date, subject to the limitations as set forth in Section 5.1(b).
5.3 GROUP LIFE PLAN. Roxio shall, until the Distribution Date (or
such other date as Adaptec and Roxio may mutually agree), continue to be a
Participating Company in any Adaptec group life insurance plan or arrangement.
5.4 ACCIDENTAL DEATH & DISMEMBERMENT PLAN. Roxio shall, until the
Distribution Date (or such other date as Adaptec and Roxio may mutually agree),
continue to be a Participating Company in the Adaptec accidental death &
dismemberment Plan.
5.5 DISABILITY PLANS.
(a) SHORT-TERM DISABILITY PLAN. Roxio shall, until the
Distribution Date (or such other date as Adaptec and Roxio may mutually agree),
continue to be a Participating Company in the Adaptec Supplemental Short-Term
Disability Plan. With respect to Roxio Employees who are employed in California,
said employees will be covered by California State Disability Insurance in lieu
of being eligible to receive benefits under the Adaptec Voluntary Short-Term
Disability Plan.
(b) LONG-TERM DISABILITY PLAN. Roxio shall, until the
Distribution Date (or such other date as Roxio and Adaptec may mutually agree),
continue to be a Participating Company in the Adaptec long-term disability plan.
5.6 BUSINESS TRAVEL ACCIDENT INSURANCE. Roxio shall, until the
Distribution Date (or such other date as Roxio and Adaptec may mutually agree),
continue to be a Participating Company in the Adaptec business travel accident
insurance Plan.
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5.7 SECTION 125 PLANS.
(a) CAFETERIA PLAN. Roxio shall, until the Distribution
Date (or such other date as Roxio and Adaptec may mutually agree), continue to
be a Participating Company in the Adaptec 125 Plan. Effective as of the
Distribution Date, Roxio may establish, in its sole discretion, a Roxio 125 Plan
for the benefit of Roxio Employees.
(b) FLEXIBLE SPENDING ACCOUNT PLAN. Roxio shall, through
December 31, 2000, continue to be a Participating Company in the health care
spending account and dependent care spending account (the "Adaptec Flexible
Spending Accounts") of the Adaptec 125 Plan, and beginning January 1, 2001 Roxio
shall cause to be implemented and shall sponsor a Roxio health care spending
account and dependent care spending account (the "Roxio Flexible Spending
Accounts") for the benefit of Roxio Employees that is substantially similar to
that of the Adaptec Flexible Spending Accounts. From January 1, 2001 to the
Distribution Date, or such other date as Adaptec and Roxio may mutually agree,
Adaptec will provide administrative services to Roxio in relation to the Roxio
Flexible Spending Accounts. Notwithstanding the foregoing, in the event the
Distribution Date occurs prior to December 31, 2000, then at the Distribution
Date Roxio shall cease to be a Participating Company in the Adaptec Flexible
Spending Accounts, and at the Distribution Date, Adaptec shall be under no
obligation, and any such existing obligation shall cease, to provide
administrative services to Roxio in relation to the Roxio Flexible Spending
Accounts.
5.8 COBRA. Adaptec shall be responsible for providing COBRA
continuation coverage (for the applicable period of time as required by law,
generally 18-36 months) to Roxio Employees and their eligible dependents who
become eligible for such coverage prior to the Distribution Date. Effective as
of the Distribution Date, Roxio shall be responsible for providing COBRA
continuation coverage to Roxio Employees and their eligible dependents who
become eligible for such coverage on and following the Distribution Date.
5.9 WORKERS' COMPENSATION PLAN. Effective as of the Separation
Date, or such other date as Adaptec and Roxio may mutually agree, Adaptec shall
establish a workers' compensation plan for the benefit of Roxio Employees (the
"Separation Date Workers' Compensation Plan"). Effective as of the Distribution
Date, Roxio shall establish, terminate or renegotiate the terms of the
Separation Date Workers' Compensation Plan. Any Liabilities that accrue under
the Separation Date Workers' Compensation Plan shall be Liabilities of Roxio.
5.10 LEAVE OF ABSENCE PLANS. Effective as of the Separation Date,
Roxio Employees shall continue to be eligible to participate in the Leave of
Absence Plans of Adaptec, subject to Section 5.5 (a) of this Agreement.
Effective as of the Distribution Date, Roxio Employees shall not be eligible to
participate in the Adaptec Leave of Absence Plans.
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ARTICLE VI
EQUITY AND OTHER COMPENSATION
6.1 BONUS AND RETENTION PLANS.
(a) Effective at the Separation Date (or such other date
as Roxio and Adaptec may mutually agree), Roxio shall cease to continue to be a
Participating Company in applicable Adaptec bonus plans that Roxio Employees
were eligible to receive awards under prior to the Separation Date. In Roxio's
sole and absolute discretion it may establish a Roxio bonus plan on or after the
Separation Date, and any award earned or accrued (as is applicable) shall be the
sole responsibility of Roxio.
(b) CEQUADRANT AND WILDFILE RETENTION PLANS. Roxio will
assume, administer and be responsible for payments under the Cequadrant
retention plan and the Wildfile retention Plan upon and following the Separation
Date. Any award earned and payable under the Cequadrant and Wildfile retention
Plans prior to the Separation Date shall be the responsibility of and payable by
Adaptec. Any award that is earned and payable pursuant to the Cequadrant and
Wildfile retention Plans following the Separation Date shall be the
responsibility of and payable by Roxio.
6.2 ADAPTEC OPTIONS.
(a) OPTION ASSUMPTION BY ROXIO. At the Distribution Date
(or such other date as Adaptec and Roxio may mutually agree), each outstanding
Adaptec Option held by Roxio Employees, whether vested or unvested, shall be, in
connection with the Distribution, assumed by Roxio. Each Adaptec Option so
assumed by Roxio shall continue to have, and be subject to, the same terms and
conditions set forth in the applicable Adaptec Stock Plans and as provided in
the respective option agreements governing such assumed Adaptec Option as of the
Distribution Date (or such other date as Adaptec and Roxio may mutually agree),
except that (i) such assumed Adaptec Option shall be exercisable for that number
of whole shares of Roxio common stock equal to the quotient of the number of
shares of Adaptec common stock that would be issuable upon exercise of such
Adaptec Option as of the Distribution Date (assuming that all vesting conditions
applicable to such option were then satisfied) divided by the Ratio, rounded
down to the nearest whole number of shares of Roxio common stock, and (ii) the
per share exercise price for the shares of Roxio common stock issuable upon
exercise of such assumed Adaptec Option shall be equal to the product determined
by multiplying the exercise price per share of Adaptec common stock at which
such Adaptec Option was exercisable as of the Distribution Date by the Ratio,
rounded up to the nearest whole cent.
(b) CERTAIN NON-U.S. OPTIONEES. Except as may otherwise
be agreed upon by Adaptec and Roxio this Section 6.2 shall govern the treatment
of Adaptec Options held by non-U.S. Roxio Employees.
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6.3 STOCK PURCHASE PLAN. Through the Distribution Date, Roxio
Employees shall continue to be eligible for participation in the Adaptec Stock
Purchase Plan. Effective on or before the Registration Date (or such other date
as Adaptec and Roxio may mutually agree), Roxio shall establish and sponsor a
Stock Purchase Plan for the benefit of Roxio Employees. Effective as of the
Registration Date, Roxio Employees shall cease to be eligible to participate in
and to have any further payroll deductions withheld pursuant to the Adaptec
Stock Purchase Plan; provided, however, that payroll deductions withheld for
Roxio Employees prior to the Registration Date may be used to purchase shares at
the next scheduled purchase date under the Adaptec Stock Purchase Plan.
6.4 STOCK PLAN. Through the Registration Date, Roxio Employees
shall continue to be eligible for participation in the Adaptec Stock Plan.
Notwithstanding the foregoing, effective as of the Separation Date Roxio
Employees shall not be eligible to receive any additional option grants that may
be made pursuant to the Adaptec Stock Plan. Effective on or before the
Registration Date (or such other date as Adaptec and Roxio may mutually agree),
Roxio shall establish and sponsor a Stock Plan for the benefit of Roxio
Employees, directors and consultants.
ARTICLE VII
ADMINISTRATIVE PROVISIONS
7.1 SHARING OF PARTICIPANT INFORMATION. Adaptec and Roxio shall
share, or cause to be shared, all participant information that is necessary or
appropriate for the efficient and accurate administration of each of the Adaptec
Plans and the Roxio Plans during the respective periods applicable to such Plans
as Roxio and Adaptec may mutually agree. Adaptec and Roxio and their respective
authorized agents shall, subject to applicable laws of confidentiality and data
protection, be given reasonable and timely access to, and may make copies of,
all information relating to the subjects of this Agreement in the custody of the
other party or its agents, to the extent necessary or appropriate for such
administration.
7.2 COSTS AND EXPENSES. Roxio shall bear all costs and expenses,
including but not limited to legal and actuarial fees, incurred from and after
the Distribution Date in the design, drafting and implementation of any and all
plans and compensation structures which it establishes or creates and the
amendment of its existing plans or compensation structures.
ARTICLE VIII
EMPLOYMENT-RELATED MATTERS
8.1 EMPLOYEE AGREEMENTS. DEFINITION. As used in this Section 8.1,
"Employee Agreement" means Adaptec's Employee Information Agreements and
corresponding agreements in foreign countries executed by each Adaptec employee.
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(a) SURVIVAL OF ADAPTEC EMPLOYEE AGREEMENT OBLIGATIONS
AND ADAPTEC'S COMMON LAW RIGHTS. All former Adaptec employees transferred to
Roxio as of the Separation Date shall remain bound by the Adaptec Employee
Agreements as if such employees had been terminated by Adaptec as of the
Separation Date; PROVIDED, HOWEVER, that none of the following acts committed by
former Adaptec employees within the scope of their Roxio employment shall
constitute a breach of such Adaptec Employee Agreements: (i) the use or
disclosure of Confidential Information (as that term is defined in the former
Adaptec employee's Adaptec Employee Agreement) for or on behalf of Roxio, if
such disclosure is consistent with the license rights granted to Roxio and
restrictions imposed on Roxio under this Agreement, any other Ancillary
Agreement or any other agreement between the parties and (ii) solicitation of
the employees of one party by the other party prior to the Distribution Date.
Further, Adaptec retains any rights it has under statute or common law with
respect to actions by its former employees to the extent such actions are
inconsistent with the rights granted to Roxio and restrictions imposed on Roxio
under this Agreement, any other Ancillary Agreement or any other agreement
between the parties.
(b) ASSIGNMENT, COOPERATION FOR COMPLIANCE AND
ENFORCEMENT.
(i) Adaptec retains all rights under the Adaptec
Employee Agreements of all former Adaptec employees necessary to permit Adaptec
to protect the rights and interests of Adaptec, but hereby transfers and assigns
to Roxio its rights under the Adaptec Employee Agreements of all former Adaptec
employees to the extent required to permit Roxio to enjoin, restrain, recover
damages from or obtain specific performance of the Adaptec Employee Agreements
or obtain other remedies against any employee who breaches his/her Adaptec
Employee Agreement, and to the extent necessary to permit Roxio to protect the
rights and interests of the Roxio Business on the Separation Date.
(ii) Adaptec and Roxio agree, at their own
respective cost and expense, to use their reasonable efforts to cooperate as
follows: (A) Roxio shall advise Adaptec of: (1) any violation(s) of the Adaptec
Employee Agreement by former Adaptec employees, and (2) any violation(s) of the
Roxio Employee Agreement which affect Adaptec's rights; and (B) Adaptec shall
advise Roxio of any violations of the Adaptec Employee Agreement by current or
former Adaptec employees which affect Roxio's rights; PROVIDED, HOWEVER, that
the foregoing obligations shall only apply to violations which become known to
an attorney within the legal department of the party obligated to provide notice
thereof.
(iii) Adaptec and Roxio each may separately
enforce the Adaptec Employee Agreements of former Adaptec employees to the
extent necessary to reasonably protect their respective interests, PROVIDED,
HOWEVER, that (i) Roxio shall not commence any litigation relating thereto
without first consulting with Adaptec's General Counsel or his/her designee and
(ii) Adaptec shall not commence any litigation relating thereto against any
former Adaptec employee who is at the time an Roxio employee without first
consulting with Roxio's Chief Executive Officer or his/her designee.
(iv) Adaptec and Roxio understand and acknowledge
that matters relating to the making, performance, enforcement, assignment and
termination of employee
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agreements are typically governed by the laws and regulations of the national,
federal, state or local governmental unit where an employee resides, or where an
employee's services are rendered, and that such laws and regulations may
supersede or limit the applicability or enforceability of this Section 8.1. In
such circumstances, Adaptec and Roxio agree to take action with respect to the
employee agreements that best accomplishes the parties' objectives as set forth
in this Section 8.1 and that is consistent with applicable law.
8.2 TERMS OF ROXIO EMPLOYMENT. At or before the Separation Date,
Roxio Employees shall be required to execute a new agreement regarding
confidential information and proprietary developments, if such form is required
at the sole and absolute discretion of Roxio. In addition, nothing in this
Agreement shall be construed to change the at-will status of the employment of
any of the employees of Adaptec or Roxio.
8.3 NON-SOLICITATION OF EMPLOYEES. Adaptec and Roxio each agree
that, effective as of the Distribution Date, Adaptec and Roxio shall not solicit
or recruit, without the other party's express written consent, the other party's
employees for a period of one (1) year following the Distribution Date. To the
extent this prohibition is waived, any recruitment efforts by either Adaptec or
Roxio during the period of one (1) year after the Distribution Date shall be
coordinated with appropriate management personnel, as Adaptec and Roxio shall
mutually agree, of Adaptec or Roxio. Notwithstanding the foregoing, this
prohibition on solicitation does not apply to actions taken by a party either:
(a) solely as a result of an employee's affirmative response to a general
recruitment effort carried out through a public solicitation or general
solicitation, or (b) as a result of an employee's initiative.
8.4 EMPLOYMENT OF EMPLOYEES WITH UNITED STATES WORK VISAS. Roxio
Employees with U.S. work visas authorizing them to work for Roxio will
continue to hold work authorization for Roxio after the Separation Date. Roxio
will request amendments to the nonimmigrant visa status of Roxio Employees with
U.S. work visas authorizing them to work for Adaptec.
8.5 NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES.
No provision of this Agreement shall be construed to create any right or
accelerate entitlement to any compensation or benefit whatsoever on the part of
any Roxio Employee or other former, present or future employee of Adaptec or
Roxio under any Adaptec Plan or Roxio Plan or otherwise. Without limiting the
generality of the foregoing: (a) neither the Distribution or Separation, nor the
termination of the Participating Company status of Roxio shall cause any
employee to be deemed to have incurred a termination of employment; and (b) no
transfer of employment between Adaptec and Roxio before the Distribution Date
shall be deemed a termination of employment for any purpose hereunder.
8.6 EMPLOYMENT LITIGATION.
(a) CLAIMS TO BE TRANSFERRED TO ROXIO AND/OR
JOINTLY DEFENDED BY ADAPTEC AND ROXIO. On or before the Distribution Date,
Adaptec and Roxio will enter into a written agreement that specifies the legal
responsibility and accompanying Liability for identified claims of Roxio, if
any.
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(b) UNSCHEDULED CLAIMS. Roxio shall have sole
responsibility for all employment-related claims regarding Roxio Employees that
arise out of facts, acts or omissions occurring on or after the Distribution
Date relating to, arising out of, or resulting from their employment with Roxio.
Adaptec shall have sole responsibility for all employment-related claims by or
regarding Adaptec employees and for all employment-related claims by or
regarding Roxio Employees that arise out of facts, acts or omissions occurring
prior to the Distribution Date.
ARTICLE IX
GENERAL PROVISIONS
9.1 EFFECT IF SEPARATION, IPO AND/OR DISTRIBUTION DOES NOT OCCUR.
If the Separation, IPO and/or Distribution does not occur, then all actions and
events that are, under this Agreement, to be taken or occur effective as of the
Separation Date, IPO, Registration Date and/or Distribution Date, or otherwise
in connection with the Separation, IPO, Registration and/or Distribution, shall
not be taken or occur except to the extent specifically agreed by Roxio and
Adaptec.
9.2 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be
deemed or construed by the parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
parties, the understanding and agreement being that no provision contained
herein, and no act of the parties, shall be deemed to create any relationship
between the parties other than the relationship set forth herein.
9.3 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the Law of the State of California
without regard to the principles of conflicts of Laws thereunder, to the extent
not preempted by the Employee Retirement Income Security Act of 1974.
9.4 ASSIGNMENT. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective legal representatives
and successors, and nothing in this Agreement, express or implied, is intended
to confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. This Agreement may be enforced separately
by Adaptec and Roxio. Neither party may assign this Agreement or any rights or
obligations hereunder, without the prior written consent of the other party, and
any such assignment shall be void; provided, however, either party may assign
this Agreement to a successor entity in conjunction with such party's
reincorporation.
9.5 SEVERABILITY. If any term or other provision of this Agreement
is determined to be invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to either party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in
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good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible and in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the fullest possible extent.
9.6 INTERPRETATION. The headings contained in this Agreement and
in the table of contents to this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. Any
capitalized term used in any Schedule but not otherwise defined therein shall
have the meaning assigned to such term in this Agreement. When a reference is
made in this Agreement to an Article, Section or Schedule, such reference shall
be to an Article of, Section of, or Schedule to this Agreement unless otherwise
indicated.
9.7 AMENDMENT. The Board of Directors of Roxio and Adaptec may
mutually agree to amend the provisions of this Agreement at any time or times,
for any reason, either prospectively or retroactively, to such extent and in
such manner as the Boards mutually deem advisable. Each Board may delegate its
amendment power, in whole or in part, to one or more Persons or committees as it
deems advisable. No change or amendment will be made to this Agreement, except
by an instrument in writing signed by authorized individuals.
9.8 TERMINATION. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Registration Date by and in the
sole discretion of Adaptec without the approval of Roxio. This Agreement may be
terminated at any time after the Registration Date and before the Distribution
Date by mutual consent of Adaptec and Roxio. In the event of termination
pursuant to this Section, no party shall have any liability of any kind to the
other party.
9.9 CONFLICT. This Agreement is not intended to address, and
should not be interpreted to address, the matters expressly covered by the
Separation Agreement and/or the other Ancillary Agreements.
9.10 COUNTERPARTS. This Agreement, including the Schedules hereto
(if applicable) and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
9.11 DISPUTE RESOLUTION. Any and all controversies, disputes or
claims arising out of, relating to, in connection with or resulting from this
Agreement (or any amendment thereto or any transaction contemplated hereby or
thereby), including as to its existence, interpretation, performance,
non-performance, validity, breach or termination, including any claim based on
contract, tort, statute or constitution and any claim raising questions of law,
whether arising before or after termination of this Agreement, shall be deemed a
Dispute as defined in the Separation Agreement and shall be resolved exclusively
by, in accordance with, and subject to the limitations set forth in the
Separation Agreement.
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IN WITNESS WHEREOF, each of the parties have caused this Employee
Matters Agreement to be executed on its behalf by its officers thereunto duly
authorized on the day and year first above written.
ADAPTEC, INC.
By:
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Name:
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Title:
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ROXIO, INC.
By:
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Name:
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Title:
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